Last week, the statistics agency in Ghana, west Africa’s second largest economy, said the country’s inflation rate had climbed to 37.2%, a three point increase on the figure reported in September. The new rate confirmed a concerning cost of living crisis in a country where consumer goods have become more expensive and the local currency is now the world’s worst performer against the US dollar according to Bloomberg.
Today, Ghanaian traders are responding to the soaring inflation and consequent high cost of doing business by locking their shops in a three-day protest. Joseph Obeng, the leader of the Ghana Union of Traders Association, the country’s largest lobbying group for retailers, said in an address that the combined effects of high inflation, exchange and interest rates have “deeply eroded” business owners’ capital by over 50% this year.
“As I speak to you now, we are not able to service our loans contracted by local banks and external suppliers. We are now at our weak end and can no longer endure any further suffering,” Obeng said.
Rising inflation has been a global story in many countries this year, including in Ghana’s neighbor Nigeria where the central bank raised interest rates last month to combat price spikes and a weakening naira. The IMF expects growth in sub-Saharan Africa to slow from 4.7% in 2021 to 3.6% this year.
For traders in Ghana though, the fear is that there is no end in sight to their plight, Obeng said.
Ghana’s Nana Akufo Addo-led government has scrambled all year for solutions, including seeking relief from the International Monetary Fund (IMF) to inject new life into the economy. But negotiations over a $3 billion package which started in July are still far from finalized after meetings that concluded earlier this month.
Abebe Selassie, the IMF’s Africa director, said Ghana will have to flesh out its economic reform plan as part of the requirements for receiving the bailout package. He also suggested that the country’s situation predated the global turmoil exacerbated by Russia’s war in Ukraine.
“In our regional economic outlook, we are very careful to flag that there are some countries where inflation has clearly been driven more by domestic factors than exogenous factors. I think Ghana would fall in that camp,” Selassie said on Oct. 14.
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